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This paper explores the relationship between the constitutional entrenchment of central bank independence and inflation performance. Empirical studies for developing countries have not found a relationship between central bank independence, proxied by the "de jure" independence established in the central bank law, and inflation. We argue that the constitution is likely to be better enforced than ordinary statutes owing to its higher legal rank. Our empirical analysis finds that in a sample of Latin American and Caribbean countries, those countries that entrench the independence of the central bank in the constitution have a better inflation performance.

Banks and Banking --- Inflation --- Macroeconomics --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Price Level --- Deflation --- Banking --- Central bank autonomy --- Central bank legislation --- Central bank accountability --- Central banks --- Prices --- Central bank mandate --- Price stabilization --- Banks and banking --- El Salvador

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This paper reviews central banks’ legal reform in Latin America during the 1990s and discusses the status of central bank independence in the region. Based on this information, it builds a simplified index of central bank independence which, in addition to the commonly used criteria of political and economic independence, incorporates provisions of central banks’ financial autonomy, accountability, and lender-of-last-resort. The paper finds a moderate negative correlation between increased central bank independence and inflation during 1999–2001 in 14 Latin American countries. Dissagregating the index, the same analysis suggests that economic independence is the key component driving the observed negative correlation between legal central bank independence and inflation.

Banks and Banking --- Inflation --- Public Finance --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Price Level --- Deflation --- Taxation, Subsidies, and Revenue: General --- Banking --- Macroeconomics --- Public finance & taxation --- Central bank autonomy --- Central bank accountability --- Legal support in revenue administration --- Central banks --- Prices --- Central bank legislation --- Revenue administration --- Banks and banking --- Revenue --- Venezuela, República Bolivariana de

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Conventional economic policy models focus only on selected elements of the central bank balance sheet, in particular monetary liabilities and sometimes foreign reserves. The canonical model of an "independent" central bank assumes that it chooses money (or an interest rate), unconstrained by a need to generate seignorage for itself or government. While a long line of literature has emphasized the dangers of fiscal dominance influencing the conduct of monetary policy the idea that an independent central bank could be constrained in achieving its policy objectives by its own balance sheet situation is a relatively novel idea considered in this paper. If one accepts this potential constraint as a valid concern, the financial strength of the central bank as a stand alone entity becomes highly relevant for ascertaining monetary policy credibility. We consider several strands of evidence that clearly indicate fiscal backing for central banks cannot be assumed and hence financial independence is relevant to operational independence. First we examine 135 central bank laws to illustrate the variety of legal approaches adopted with respect to central bank financial independence. Second, we examine the same data set with regard to central bank recapitalization provisions to show that even in cases where the treasury is nominally responsible for maintaining the central bank financially strong, it may do so in purely a cosmetic fashion. Third, we show that, in actual practice, treasuries have frequently not provided central banks with genuine financial support on a timely basis leaving them excessively reliant on seignorage to finance their operations and/or forcing them to abandon policy objectives.

Banks and banking, Central. --- Banker's banks --- Banks, Central --- Central banking --- Central banks --- Banks and banking --- Accounting --- Banks and Banking --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Central Banks and Their Policies --- Public Administration --- Public Sector Accounting and Audits --- Banking --- Financial reporting, financial statements --- Central bank autonomy --- Central bank legislation --- Financial statements --- Central bank balance sheet --- Finance, Public --- United States

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The move from individual decision making to committee decision making is widely seen as a major evolution in contemporary central banking. This paper reviews the relevant economics and social psychology literatures with a view to providing some insights into the question of optimal monetary policy committee design. While the preference aggregation literature points to the effect of committee structure on the extent of the time inconsistency problem and its associated costs, the belief aggregation literature analyzes how different committee structures affect the efficiency of information pooling, the process of social influence, and collective accuracy. In conclusion, we highlight the main tradeoffs that the analysis has brought to light and point to directions for future research.

Committees. --- Electronic books. -- local. --- Monetary policy -- Decision making. --- Finance --- Business & Economics --- Money --- Monetary policy --- Decision making. --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Associations, institutions, etc. --- Meetings --- Banks and Banking --- Inflation --- Public Finance --- Taxation --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Price Level --- Deflation --- Taxation, Subsidies, and Revenue: General --- Central Banks and Their Policies --- Banking --- Macroeconomics --- Public finance & taxation --- Central bank legislation --- Tax incentives --- Communications in revenue administration --- Banks and banking --- Prices --- Revenue --- United Kingdom

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This paper presents key findings of the Financial System Stability Assessment, including Reports on the Observance of Standards and Codes on Monetary and Financial Policy Transparency, Banking Supervision, and Payment Systems for the United Arab Emirates (UAE). The UAEs financial sector and financial sector supervision are developing unevenly. The financial sector is dominated by well-supervised banks, which pose minimal near-term systemic risk. Although the payment systems are simple and far from state-of-the-art, they are well managed, and systemic risks are limited.

Banks and Banking --- Finance: General --- Banking --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- General Financial Markets: Government Policy and Regulation --- Financial Institutions and Services: Government Policy and Regulation --- Finance --- Banking law --- Financial services law & regulation --- Payment systems --- Bank legislation --- Commercial banks --- Foreign banks --- Financial markets --- Financial regulation and supervision --- Financial institutions --- Bank supervision --- Banks and banking --- Clearinghouses --- Financial services industry --- Law and legislation --- Banks and banking, Foreign --- State supervision --- United Arab Emirates